For the third straight month, sales on preexisting homes dropped, leading realtors to call it a "buyer's market." Here are some strategies sellers are using to entice buyers:
■Dropping price by 50 bucks
■Carrying around wad of money; acting like owning this house got them that money
■Pointing out dishwasher several times
■Explaining to potential buyers how fulfilling it is to make mortgage payment on time
■Telling long, touching story about how grandmother needs $312,500 for kidney operation
■Letting third blouse button go
■Drowning out sound of noisy furnace with soulful vocals of Michael McDonald
■Reassuring buyers that people purchase things they can't afford all the time

549k pending sale - if you go to rental listings in that neighborhood , they rent for $2600-2800 . You can do the math what the mortgage is with current rates.

There are tons more...

$1950 + 460 in tax + remodeling cost/maintenance on a 35 year old house + opportunity cost of not having $110,000 to invest... not exactly a great deal.

You're in the hole.

you forgot the tax deduction - and nobody forces you to remodel a house - after all when you are renting, you are renting that exact same 35 year old house for $2600-2800 a month -

I consider the fact that I can remodel a big plus. We lived in those shitty rentals with cheap everything, old dishwasher, old washer/dryer, old A/C that barely pumps out cold or warm air. And when you call the landlord and ask him to improve it he goes "It's working though, right? - well, its an old house..is what it is"

the 110k is not gone, dude. It's not like you spent it...like your rent. THAT is actually gone. So after 10 years you may have had your 110k to invest but you wasted 310k on rent (case of 2600/m rent) -

you forgot the tax deduction - and nobody forces you to remodel a house - after all when you are renting, you are renting that exact same 35 year old house for $2600-2800 a month -

Well most people these days wouldn't want to live in a home with 35 year old counters, leaking roof, rotted plumbing, floors, and broken water heater. They pick and choose what awesome neighborhood they want to live in, and in 6 - 12 months if they don't like it, they go shop for another awesome place to live.

You're stuck in a 35+ year old home that probably has at least $50,000 to $100,000 in deferred upgrades to bring it up to modern standards and finishes.

You also forget your 6% of realtor commissions you automatically give up when you have to sell the place. On a $550,000 home, that's $33,000. Combine that with the cost to upgrade such an ancient home, you are blowing $100,000+ dollars right there.

Scenario 2: I need to move because of job or just because I want to ...I rent the house out (even if you just break even)

Scenario 3: You're unemployed long term, can't find work in your area, can't sell the house. Go bankrupt, and lose the house to foreclosure.

That's actually a very common one these days.

Scenario 4: You get completely f**ed up in a car accident, loose all your teeth and can't ever work again...

Let's face it - if shit hits the fan, you are screwed. Renting does not protect you from it. You sign a 2 year lease, put down a huge deposit...and when you loose your job, you do what? Move where? If you cannot afford rent anymore...

If you are in the position of thinking that your job is very much on the edge of ending...DON'T BUY A HOUSE ...obviously

Let's face it - if shit hits the fan, you are screwed. Renting does not protect you from it. You sign a 2 year lease, put down a huge deposit...and when you loose your job, you do what? Move where? If you cannot afford rent anymore...

Not really. Someone can move into a shared apartment situation renting a room for $500 - $800 a month, and live comfortably off unemployment insurance for 2 years+ while looking for work. Can't do that when you have a huge mortgage. Renters have less liability overall, so it's easier to adapt in a tight situation.

Lol, interest rates dropping, credit easy, home sales booming, builder stocks are up. Suburbia is popular again, inner city junk is overpriced and sitting. It's kind of like the run up all over again, just happening quicker. Why, I don't know, interest rates are not going up until 2015. Still, often the rush is investor money, 40 MBS billions a month has to be spent so we should see continual improvement (if you can call it that), on the RE front, problem is..

It's more artificial than real. Especially when you consider that this economy is built on debt, fueling growth that is ..

Not really. Someone can move into a shared apartment situation renting a room for $500 - $800 a month, and live comfortably off unemployment insurance for 2 years+ while looking for work. Can't do that when you have a huge mortgage. Renters have less liability overall, so it's easier to adapt in a tight situation

There is always a way.

What stops you to add some roommates to your mortgage situation in a crunch. If you can move into a tiny apartment in emergency, you can also add some roommates in your house and keep the house and keep paying the mortgage.

There are a lot of situations. If you bought a house you can afford than you can easily live thru some tough times with your savings and unemployment.

All the fed and congress can do is extend their balance sheets to prevent the liquidity trap by keeping credit deleveraging.

Here is the error in your thinking. You assume the rules of the game are fixed when reality is they are changing all the time.

Remember, rightly or wrongly, the thinking among TPTB is that a true honest to goodness liquidity trap is so dangerous that it simply cannot be allowed to happen. Revolutions are borne on the shoulders of such events. Thus, before they have to roll out the tanks to defend the status quo, ask yourself what they will do to prevent this possibility.

5 years ago, deflationistas were thinking bernanke shot his last bullet with zirp. Then, they simply changed the rules of the game and came up with QE.

Once QE works no longer, do you think thats it? Nope. Instead, they will change the rules yet again. And again, if the fear (rightly or wrongly is a liquidity trap will mean tanks in the streets) imagine how many times they will keep making incremental changes to prevent this from happening.

Interest rate changes
Changes in Discount rates
ZIRP
QE
TARP
QE2
Operation Twist
QE3 (we are here)
QE to infinity
Nationalization of industries or sectors of the economy.
Debt Jubilees
Selective Defaults
Printing of checks to every man woman and child in the US (remember, the moniker "helecopter ben" isnt mere hyperbole - read his position paper on how far he would go to prevent deflation).
The Sale of govt controlled assets.
Privatization of licenses.
The sale of Alaska.

Think that last one is unlikely? Its not like it never happened before. Imagine the way those Russians felt when the woke up some on morning in 1867 and were told they were now living in America. Depending upon the muptiple, Selling Alaska to China could buy us another 50+ years of can kicking. After all, the Brittish have been doing this for over 200 years - selling off the periphery to extend BAU in the core.

So again, the error in your thinking is all the fed and congress can do is expand their balance sheet is because you think they cant change the rules of the game at will. The reality is, they can and will do so in ways you cant imagine.

True, if they thought deflation was no big deal then yes congress and the fed would roll over and let the liquidity trap set up and resolve itself. However, so long as they are (rightly or wrongly thinking liquidity traps = tanks in the streets), you will continue to underestimate how far they are willing to go to prevent that from happening.

What stops you to add some roommates to your mortgage situation in a crunch. If you can move into a tiny apartment in emergency, you can also add some roommates in your house and keep the house and keep paying the mortgage.

Yeah I guess you could live with 5 other people in your house and double bunk, then you have to ask yourself what's the point of owning a house? Not to mention if anything breaks, you as the owner are still on the hook for the maintenance, which would be plentiful with that many people living in the same place. Also your tenants would be limited to college guys, former drug addicts, or pedophiles. No family or couple is going to move in a shared house with some dude who is behind on his bills.

Much harder to maintain a large house than downsize from a big apartment to a smaller one.

Hellz no. 20k a year is more than enough!! 1920's prices are coming back...I am a snatch a BIG house up soon. All Cash!! Yeah Babeee...you watch! You are just a loosing homeowner. Don't hate the game, hate the player...or vice versa.

Scenario 2: I need to move because of job or just because I want to ...I rent the house out (even if you just break even)

Truth 1: Your losses are massive and growing.

No such thing as free rent. You just are trying up your money in your house, rather than having it in investments. There is opportunity costs lost, and that is then your rent. Sometimes actually renting is cheaper.

It's all now, is it? So I guess all those pesky works of art, like those Van Gogh painted and had such difficulty selling, are now presumably not really selling for the rather high prices I see reported in the news.